You've bought the flat-pack furniture, eaten the Swedish-style meatballs... and now you can live on an Ikea housing estate.

The company is building its first British housing development in Stratford beside the Olympic Park, where it plans to turn Londoners into eco-families.

The 1,200-home Strand East development, built around canals by Inter Ikea - the Swedish furniture giant's investment arm - is designed to be a "mini-Venice" with moorings, a water-taxi service and a floating cocktail bar.

It will feature a 130ft-tall illuminated wooden tower and form the gateway to the Olympic stadium and the Mayor's "Hubble Bubble" 2012 observation tower, the ArcelorMittal Orbit.

Harald Muller, business development manager at Inter Ikea, said: "It will be the newest and most interesting development in the whole area." The estate will be the antithesis of the converted athletes' village, where it has been claimed properties are so close you can "spit from one balcony to another".

The firm, which reinvests store profits into building projects across Europe, believes its aim of slashing production costs could eventually remove the need for "affordable" homes.

About 40 per cent of the properties will be three-bedroom mews homes. Courtyards and a public square will encourage neighbours to interact.

Cars will be parked underground, rubbish will be removed through underground suction tunnels and a water power plant will help to meet energy needs. A school, health surgery and nursery will be built to minimise travel.

House prices are not yet known as planning permission has yet to be sought. Demolition work has begun and stage one will see a three-storey restaurant, office block and gallery space open next spring.

Boris Johnson said: "This is yet another great example of the 2012 legacy rippling out of the Olympic Park and across east London."

Andrew Lloyd Webber has met Boris Johnson to voice fears that the Olympics will be devastating for theatres as London struggles to cope with so many sports-minded visitors.

Lord Lloyd-Webber is considering closing The Wizard of Oz at the London Palladium for two weeks and is in talks with producers of shows at his other venues. The main concern is the city's transport, despite the Mayor being confident that it will cope.